Penalty Relief from the IRS Due to Statutory Exception

Penalty Relief from the IRS Due to Statutory Exception

When you’ve done your part to stay compliant with the IRS, it can be frustrating to receive notices that suggest otherwise.

Even worse? If these notices ask you to pay hefty penalties. Depending on the situation, however, you may be able to get relief on the basis of statutory exceptions, as we clarify below.

What Is Statutory Exception?

Often confused with reasonable cause, statutory exception refers to a wide range of circumstances that may keep you from fulfilling your obligations to the IRS. This often — but not always — involves errors or inefficiencies prompted by the agency, rather than taxpayer mistakes.

Common examples of cases involving statutory exceptions include:

  • Receiving incorrect written advice from the IRS
  • Living in a federal disaster area
  • Tax returns are mailed on time but the taxpayer still receives a penalty
  • Involvement in military operations that occur within a combat zone

Requesting Penalty Relief

Once you’ve determined that you are eligible for penalty relief based on statutory exception, you’re welcome to call the IRS at the toll-free number listed on the notice you’ve received from the agency. Be prepared to explain which penalty you want relieved and why you believe it should be removed.

Unfortunately, the IRS isn’t always able to grant penalty relief over the phone. An alternate approach involves filing IRS Form 843: the Claim for Refund and Request for Abatement. On this document, you have the option to indicate that your request relates to “IRS errors or delays,” as well as “erroneous written advice from the IRS.”

Be sure to provide a detailed explanation as to why, exactly, you think the IRS has acted in error — and why you deserve penalty relief.

All this can be overwhelming and time-consuming, so working with a tax professional may be advisable. An enrolled agent can improve your odds of getting the relief you deserve.

If you require penalty relief from the IRS, the statutory exception is just one of many potential paths forward. Contact the Highland Tax Group to learn more about your options.